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MACRO UNIT 1
| Term | Definition |
|---|---|
| Micro | study small units/principles of economy |
| Macro | overall view of economy |
| Economics | how society uses limited resources to satisfy unlimited wants |
| Study economics | studying scarcity |
| choice | trade-offs |
| cost to make a choice | opportunity cost |
| marginal | ADDITIONAL |
| what should cost equal | benefit |
| Consumers | individuals who use goods and services (G/S) to satisfy their needs and wants |
| needs | survival |
| wants | expression of a need |
| service | work performed |
| Consumption | using up goods and services to satisfy individual's needs and wants |
| Conspicuous Consumption | using up goods and services to impress others |
| Dollar Votes | as a consumer spends on G/S; consumers are "voting" for products and services |
| Consumer Sovereignty | Individual has control and is independent of everyone else |
| Sole Proprietorship | one owner |
| Partnership | 2 or more |
| Corporation | separate entity (large) |
| liability | responsible |
| Land | all natural resources *Scarcity* ex: oil, timber, coal, natural gas |
| Labor | an individual's skill, effort, ability |
| wage | cost of labor --> business pays wages; hourly |
| salary | yearly |
| Govt. | makes min wage |
| unemployment | % without a job |
| Capital (good) | a tool, equipment, or factor used in method --> production |
| Entrepreneurship | a risk taker in search of profit |
| $ financial capital | money used to purchase resources |
| 3 Basic Economic Questions | 1. What to produce 2. How to produce 3. For whom? |
| Traditional Economic System | past, custom, ritual ex: Amish, Native Americans |
| Command Economic System | Govt control ex: N. Korea |
| Market Economic System | individual --> power ex: USA |
| 1. Economic Freedom | cornerstone; apply to any job/quit OR hire/fire |
| 2. Economic Security ("safety net") | -lose job --> unemployment compensation -elderly --> social security -disabled --> disability |
| 3. Economic Efficiency | use of resources -due to scarcity --> efficiency Ex: Electric Timers, wind farms, fuel standards *Conserve resources + help world* |
| 4. Economic Equity | fairness -anti-discrimination laws -antitrust legislation -food labels |
| 5. Economic Growth | GDP --> 3-5% per year - the total amount of final G/S produced in a given year --> measures production |
| 6. Full Employment | NRU - national rate of unemployment 4-6% = unemployment rate |
| 7. Price Stability | measures inflation --> general rise in PL (price level) 2% decrease |
| What is production? | creating G/S |
| Productivity | efficiency of creating G/S |
| How does productivity increase? | 1. specialization or division of labor 2. Increase in human capital |
| Specialization | doing a specific task well |
| Human capital | sum of people's efforts, abilities, and skills |
| 3 examples of human capital | a. Training/Education b. Incentives c. Morale |
| Incentive | raise, commission, bonus, promotion, employee award |
| Moral | environment, culture, how you feel |
| 4 assumptions when constructing a PPC | 1. Look at 2 goods: Consumer + Capital 2. Technology is fixed 3. Fixed resources 4. Fully employment/fully efficient |
| Economic growth occurs when | a. New technology b. Increase in the quantity of resources c. Increase in the quality of resources |
| Factor Markets | Resources or the factors of production are brought and sold |
| Product Markets | Goods and Services are brought and sold |
| Circular Flow of Economic Activity | the flow of money and resources |
| mergers | government must approve |
| horizontal merger | two of the same industries combine |
| vertical merger | two different companies combine |
| aquisitions | when a larger company purchases a smaller company |
| conglomerate | 3 or more mergers |
| Non-profit | to improve society --> do not pay taxes + govt approved |
Created by:
lilli.spears1